China summons US ambassador over hacking charges

By Edd Gent

Published Tuesday, May 20, 2014

China has summoned the USA’s ambassador after the US accused five Chinese military officers of hacking into American companies to steal trade secrets.

Ambassador Max Baucus met with Zheng Zeguang, assistant foreign minister, late yesterday shortly after the US charged the five Chinese, accusing them of hacking into American nuclear, metal and solar companies to steal trade secrets.

Zheng "protested" the actions by the US, saying the indictment had seriously harmed relations between both countries, state news agency Xinhua said today, and he told Baucus that depending on the development of the situation China "will take further action on the so-called charges by the United States".

"The Chinese government and military and its associated personnel have never conducted or participated in the theft of trade secrets over the Internet," Xinhua quoted Zheng as telling Baucus.

Zheng told Baucus that the US attitude to Internet security was "overbearing and hypocritical" and urged the US to give China a clear explanation on reports that Washington has long spied on the Chinese government, businesses, universities and individuals. US Embassy to China spokesman, Nolan Barkhouse, declined to comment.

This is the first criminal hacking charge that the US has filed against specific foreign officials, and though Beijing will not hand over those indicted the move would prevent the individuals from traveling to the US or other countries that have an extradition agreement with the US.

US Federal prosecutors said the suspects targeted companies including Alcoa, Allegheny Technologies, United States Steel, Toshiba unit Westinghouse Electric, the US subsidiaries of SolarWorld and a steel workers' union.

According to the indictment, all five defendants worked with Unit 61398 of the People's Liberation Army, which was outed by US cyber security Mandiant last February in a 70-page report before they were acquired by global network security company FireEye in December.

It’s 12-storey Shanghai base houses as many a several thousand staff and is kitted out with specialist fibre optic lines, while staff are trained in areas from English linguistics to covert communications, network security and cyber attack strategy, according to the Mandiant report.

The indictment said the unit had been "hired" by Chinese state-owned companies to provide information technology services" including assembling a database of corporate intelligence. The Chinese companies were not named.

The Chinese foreign ministry said it would suspend the activities of a Sino-US working group on cyber issues and the defence ministry issued a similarly pointed statement on today, saying the accusations contained "ulterior motives".

An unnamed spokesman from the State Internet Information Office was quoted by Xinhua as saying that the US "attacks, infiltrates and taps Chinese networks belonging to governments, institutions, enterprises, universities and major communication backbone networks".

"Those activities target Chinese leaders, ordinary citizens and anyone with a mobile phone," Xinhua quoted the spokesman as saying. "China has repeatedly asked the US to stop, but it never makes any statement on its wiretaps, nor does it desist, not to mention apologise to the Chinese people."

Xinhua cited data from China's top Internet security agency, the National Computer network Emergency Response technical Team Coordination Center (CNCERT), which said a total of 2,077 Trojan horse networks or botnet servers in the US directly controlled 1.18 million host computers in China during the period from March 19 to May 18.

The CNCERT found 135 host computers in the US carrying 563 phishing pages targeting Chinese websites that led to 14,000 phishing operations. The centre also found 2,016 IP addresses in the US had implanted backdoors in 1,754 Chinese websites, involving 57,000 backdoor attacks, during the same period.

China has long singled out the US as the top source of intrusion on its computers and says it is a victim of cyber attacks.

Shi Yinhong, director of the Centre for American Studies at Renmin University in Beijing, called the US legal approach against China "very rude", saying China could respond by suing the US government and American businesses. "If this develops to an even worse degree, then it would be tit for tat," Shi said.